Are Natural Gas Liquids as Good as Oil?

abarrelfullabarrelfull wrote on 20 Jul 2012 13:42
Tags: ethane ngl

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The Energy, Security, and Climate blog posted a good question:

Are Natural Gas Liquids as Good as Oil?

Its an important question because a growing proportion of the world's liquid hydrocarbons are Natural Gas Liquids. When statistics are given on crude production, we pretend that Crude and NGLs are interchangable.

Some critics like to completely dismiss NGLs as worthless, a view that Michael Levi rejects.

Personally I believe he is right to criticise the Jeremiahs. In the long term, I view them as almost 100% equivalent, and this is why.

  1. Ethane is a substitute for Naphtha in petrochemical production and Naphtha is the raw material of gasoline. So the more ethylene that is produced from ethane, the bigger the gasoline pool
  2. Propane is utilised in propane dehydrogenation units to produce propylene, another petrochemical product normally produced from naphtha. A recent announcement can be read here
  3. Butanes and Pentanes can be processed in Isomerisation or Alkylation units to manufacture gasoline blending components
  4. NGLs usually contain at least some naphtha, adding directly to the gasoline pool
  5. There are also many countries where significant volumes of LPGs (propane/butane) are used a automotive fuels. Just because you don't live in one, it doesn't mean that LPG is not a gasoline substitute

With the exception of the naphtha component (and kerosene for heavy NGLs - so called condensate) none of this is immediate. However, everyone in the industry is aware of the trends, and there are huge investments going on to take advantage of them. To dismiss NGLs just because we have a current surplus of Ethane is a very one sided view of the issue.

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